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The picture is getting shakier for BSkyB so much so that Credit Suisse thinks it is a prime candidate to short.
The Swiss bank's pointy-heads today gave a triple-whammy of reasons to bet against the satellite broadcaster, sending its shares down 4p to 5501⁄2p. They say that with the UK pay TV and broadband market becoming mature Sky must change its strategy from market expansion to grabbing customers off rivals. Credit Suisse also reckons that Sky's broadband division will struggle to meet its target to break even by 2010 because the market is competitive and slowing. And analyst Nick Bertolotti predicts that if Sky drops its HD subscription charge, this would threaten more than 10% of their forecasts for earnings.
Square-eyed Brits refusing to ditch their pay-TV packages have helped BSkyB to weather the recession with relative ease. But, with the cyclical stocks in recovery, Credit Suisse says Sky's defensive qualities no longer look so attractive. It sets a 430p target price for Sky's shares, with a sell rating. Telecoms group Cable & Wireless also found itself on Credit Suisse's list to short amid fears over sales growth at its Worldwide arm. The division, which provides telecoms services mostly to UK enterprise customers, is expected to struggle as corporate customers stop splashing out. C&W shares slipped 1⁄4p to 1441⁄4p.
Shares in London were on the back foot as poor performances from Royal Bank of Scotland, 3p lower at 51p, and British Airways, off 6p at 224p, weighed on the FTSE. The index lost 40.69 points to 5098.68.
Shares in oil explorer BG Group have risen 12% since the start of the month, and today chief executive Frank Chapman reckoned it was time to take profits. Chapman has dumped 1.6 million shares in the company at 1113p a pop, sending shares in the group 21p lower to 1084p.
Credit-crunch holidays and the brief summer sun have given sales at Halfords a boost. That's the verdict of Investec, which today advised snapping up shares in the bicycles and car parts retailer. The broker reckons that Brits who stayed at home this summer flocked to the chain to pick up their bicycles, trailers, tents and roof boxes before heading off into the countryside. Investec thinks Halfords will report an 18% jump in pre-tax profits in the first half next month, on the back of flat like-for-like sales. Analysts have jacked up their target price for the shares from 400p to 435p. Today, they jumped 3.6p to 344.2p.
Shares on Wall Street were in retreat overnight, dented by profit-taking as investors worried that the Federal Reserve is closer to pulling back on extraordinary measures to inject funding to shore up the economy. The Fed's policy-setters met and kept interest rates unchanged, as expected, but they also said the US central bank would slow purchases of mortgage debt to extend the programme's life until the end of March a move seen as a step towards a measured withdrawal of its support for the economy during the downturn. The Dow ended down 81.32 at 9748.55.
Technology stocks offered some relief with prices extending their recent run. Palm, the smart-phone maker, priced its $20 million (£12.2 million) fundraiser at $16.25 a share, a discount of 5% on the previous day's close.
Seagate, which makes computer hard disk drives, rose 1.3% to $15.89 after indicating that sales may exceed its own forecast as demand picked up. Yahoo rose 4.2% to $17.57 after the search engine operator announced it was set to gain market share in Asia.
Asian investors had to cope with a day of mixed trading. Tokyo investors made up for lost time on returning to work after a series of national holidays this week. Leading shares made progress, lifted by exporters such as Kyocera , which advanced 3% to 8320 yen (£56). Honda was up 1.1% to 2860 yen and Tokyo Electron jumped 4.3% to 5820 yen. Sony gained 2.9% to 2665 yen.
A Sony executive said that sales of the PlayStation 3 video game console jumped after a $100 price cut last month, and strong demand could lead to empty shelves at retailers.
The Nikkei Average hit a four-week closing high of 10,544.22, up 173.68.
Hong Kong shares took a dive, reflecting falls overnight in New York and Shanghai. The Hang Seng index fell 499.95 to 21,095.57.
